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An informal, stream-of-consciousness reflection on business ideas, events and issues in modern business, modern life and with some specifics to the web-software industry by Paul Tomori, Internet Entrepreneur

Never Settle If You Are In The Right
By Paul Tomori
Tuesday, July 20, 2010 at 09:34:26 (EDT)

So, did you hear the latest regarding Goldman Sachs? They are settling with the Securites and Exchange Commission over charges of fraud related to that case where they facilitated a trade between buyers of a security whose seller cherry-picked investments that were likely to fail.

The people conducting a probe on the matter unveiled some repugnant internal emails from Goldman staff where the staff mocked the security itself and ridiculed buyers. So, their scruples have much to be desired.


Goldman asserted that they had no fiduciary duty to advise the buyers of the security of its overly-risky status... and Goldman was correct about that. Especially in financial markets, the buyer must beware. The buyer must do one's own research. There are many people who did NOT buy into the security in question. Why is that? They did their homework. They sized up the risk and decided it wasn't worth it.

That takes great care. After all, some financial packages are like sausages - you never know for sure what's in them. So, if you are buying sausage-like investments, know that you are taking a risk and know that you can't always trust the seller - you really have to do your own research OR simply don't buy sausages - buy tenderloin!

Even Warren Buffett stood by Goldman Sachs on this matter.

So, now why is Goldman paying $550M to settle? If they are truly in the right and if they followed the rules, why not take this to the limit? Why just "buy yourself out of trouble" especially when you are asserting that the trouble is unwarranted.

Just on principle, I, for one, would never settle.

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